There are obviously a lot of things to consider when sourcing UK property investments. Most of them, you might assume, will naturally fall around meeting your own needs. Cost, possible profit potential, how much income each property under consideration might generate on a monthly/annual basis, how much cash you’ll need to put down and more.
All of this is very sensible, but if you are making a property investment you intend to turn into an income generating rental property then there is another point of view, and another set of wants and needs you should keep top of mind at all times; that of your future tenants.
It’s like standard marketing in a way. You need to consider your target audience when you determine the products and services that you’re going to offer. Or, in this case, the home and amenities you are going to provide in return for that guaranteed monthly income.
That’s why here we are going to step away from what you want from a UK investment property for a few minutes and look at things from a tenant’s point of view.
Before we get into the considerations you’ll need to make on behalf of your future tenants we should touch on why determining a target tenant group can be so effective when it comes to ensuring that you get the best possible ROI on a rented out investment property.
Basically you need to determines a target tenant group for the dame reasons a retailer determines who their target market is. If you determine who you want to rent to you’ll save time and money advertising properties for rent because you can zero in on where the best places to place your ads are.
You can also potentially avoid future rent disputes by choosing to market to those with certain types of income that may be more reliable than others. Then, if you are not going to be using a property management company – which many first and second time landlords don’t as it just cuts into their profit margin a little too much – there’s the simple matter of whom you personally can relate to better to help ensure a smoother landlord/tenant relationship.
Onceyou have determined who your target tenants are you can then put yourself in their shoes when making decisions between available UK investment properties. Here are someof the most important considerations to keep in mind:
No matter what town or city you choose to invest in property in the fact is that different areas attract different types of tenant. Obviously a more affluent area attracts more affluent tenants, but that’s not really what we mean.
A property, for example, that’s close to a great school where the roads are quieter and there is plenty of park lands around is almost certainly going to be a magnet for families with children. A city centre property on the other hand is more likely to be something that attracts professional singles and couples.
These ‘tenant types’ are likely to have very different expectations in what they expect from a property and a landlord. Often young families are willing to overlook a few flaws in a rental property -not dangerous ones, just things like older paint, older fixtures and fittings, in order to live in a safer, friendlier neighbourhood near the school of their choice.
Young professionals on the other hand are more likely to demand newer fixtures and fittings, a more up to date general design, more ready access to things like restaurants, gyms and nightclubs and better access to public transport.
When accessing a potential UK property investment for future rental purposes you will also need to consider whether the property is suitable for your target tenant in terms of size, layout and condition.
It’s hard to find a perfectly maintained, bang up to date property at a reasonable price, and usually you’ll need to make at least some updates, repairs and renovations before the property is fit to let. However, as we mentioned earlier, different tenant types are likely to have different expectations.
Terraced properties in lower income suburban areas will need to be improved to a safe, liveable standard, but not necessarily to meet the higher expectations of the city dwellers. For example, the latter will probably be looking for things like formal landscaping and maintenance for outdoor spaces to be done for them, while a family in the suburbs will probably be willing – and will often even prefer – to get the lawnmower out themselves at the weekend and create – and maintain – a garden space themselves.
It’s an obvious must that you check the security of the property itself and take into consideration how much time and money will be involved in making it properly secure, but you’ll also need to consider the safety of the property given the area it’s located in.
If the investment property you are considering is part of a row of terraced homes, for example, it probably has a back garden that leads into a rear alley. How secure is that alley? Is it gated at both ends? Is it likely to become a security concern that puts tenants off?
In a property that’s a flat in a complex, how secure is the complex itself? In both cases these things are likely to be out of your personal control if you purchase the property, so you will need to factor in any possible security issues into your final purchasing decisions.
No, you can’t control who your future tenants neighbours will be, but you can try to meet a few so that you can get an idea about how they might affect the rentability of the property in the future to your target tenant group. Even if you don’t want to take the bolder step of knocking on doors to schmooze you should at least visit the area at different times of day to get a better feel of who lives in the immediate area.
If you are targeting retirees as a tenant group then the last thing they are likely to want is a property with lots of stairs. Similarly, a young family is likely to want a driveway to park their car(s)at the very least, and some may prefer a formal garage.
You may even need to consider more immediate access concerns. If undertaking refurbishment work looks like it will be needed to get the property rental worthy, then how hard will it be for builders and their materials to get on and off the site?
Changing the access to the property can be very expensive and will also cost you a lot of time so consider this from the outset when weighing up your purchase decision.
Are the fixed costs like council tax and any other service charges affordable for your target tenant and in keeping with similar properties?
Is the property well insulated and energy efficient? This can have a big impact on the general home running costs for your future tenants and something seasoned tenants will take into account when choosing between rentals.
When considering what your target tenant will expect – and/or might be willing to pay more for – the fact that we live in a digitally driven world might be a biggie.
Savvier tenants – young professionals AND families with gaming mad kids – will be looking for things like good mobile signals, excellent Internet connectivity options and decent indoor Wi-Fi connection conditions. You won’t necessarily have to offer, as a landlord, to pay for such things but being able to tell prospective tenants that it’s all available will be a plus for many.